Just as important as the amount of dollars spent on health care is how they spend the money. Since governments directly purchase care for citizens they must have a scheme for deciding what rates to pay. These range from cost plus payments (giving providers an incentive to have lots of costs)to "prospective" payments like hospital DRG's. There are hundreds of these decreed prices for various hospital services. Of course anyone who passed Econ 101 knows it is impossible for the government to correctly set prices. The resulting deadweight economic loss on the system is enormous.

• posted by Mike Bond
• July 15, 2007 @ 11:56 am
• Permalink

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